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Update on 1/1/14 Requirement on Employees to Purchase Coverage
Beal Benefits has been fielding calls and emails from your employees regarding the upcoming requirement that they all must have/purchase health coverage as of 1/1/2014, or be fined by the IRS. This is the most updated information regarding the subject that we will be passing on in response to any calls or emails received at our office.
Originally, the IRS stated any individual who did not purchase health insurance effective 1/1/14 would be fined.
The challenge with the 1/1/14 requirement date is that most groups’ insurance renewal dates are not January 1st. Since Healthcare Reform mandates are not considered a Qualifying Event to allow employees to enroll for their Employer Sponsored plan outside open enrollment, employees who work for groups whose renewal date is not January 1st will need to wait until open enrollment in 2014 to enroll. (Unless, of course, they are able to show proof of a Qualifying Event.)
The IRS just realized this is a dilemma and will now allow Transitional Relief for this exact situation.
Here are the new regulations to accommodate employees whose employer sponsored plan does not renew January 1st, who will not be able to enroll for their employer sponsored plan until their 2014 open enrollment:
- Employees and dependents eligible for an employer-sponsored health plan with a renewal date other than January 1st may avoid the IRS penalty fine if they enroll for health coverage during their open enrollment period in 2014.
- Therefore, employees that are not currently insured and do not purchase health coverage through an individual plan or the State Exchanges effective 1/1/2014 will not be fined if they enroll for health benefits at your company’s open enrollment in 2014.
- For example: Your benefit renewal date is 4/1/14, and your currently uninsured employees enroll for the group plan at your open enrollment. The way HCR law was originally written says these employees would be fined for not having health coverage on 1/1/2014. The newly revised regulations state the employee can remain uninsured from 1/1/14-3/31/14 (or until your open enrollment period in 2014) and as long as they enroll for their employer sponsored plan effective 4/1/14 (or at your open enrollment date in 2014), they will not incur the IRS fine.
Healthcare reform laws are being amended often and Beal Benefits will keep you up to date with any and all changes.
Beal Benefits, “We make your employees happier and your bottom line healthier”
Healthcare Reform: Questions and Answers on Recent Changes
What does the delay of the Employer Shared Responsibility provision mean to employers with more than 50 or more FT (or full-time equivalent) employees?
- The delay in the employer shared responsibility penalties means that employers will NOT incur penalties if they do not offer minimum value, affordable coverage (9.5% of annual salary) to at least 95% of their full time employees for plan years beginning on or after January 1, 2014. The effective date has been delayed to January 1, 2015.
Are any of the other provisions of the legislation delayed or impacted?
- No provisions of the legislation other than the employer mandate penalty have been delayed, so employers will still need to ensure that their benefit plan offerings are in alignment with applicable provisions, Beal Benefits is making sure that ALL your benefit plans meet all guidelines at your renewal date. All employees are still REQUIRED to purchase coverage in 2014, or be fined in 2015 tax year (minimum of $95.00 if they have a refund)
As an employer am I still required to provide a minimum value, affordable plan in 2014?
- NO, While the government has encouraged employers to continue to offer minimum value, affordable coverage in 2014, there is no penalty assessed for the 2014 plan year if they do not.
Does this apply to all size employers?
- The ER mandate applied to employers with 50 or more FT or FT equivalent employees. So the delay provides relief to those employers.
Are the IRS guidelines for the definition of full time employees, those working 30 hours or more, delayed?
- The 30 hour per week definition of “full-time employee” only applies to the employer mandate, which has been delayed for one year.
What impact does this news have on the 30-hour-per-week definition of full-time employees?
- The IRS guidance outlining the definition of a full-time and part-time employee is unaffected by the employer shared responsibility penalty and employer reporting delay.
Written by Tom Beal of Beal Benefit Solutions.
*All information above is current as of 9/26/13, please check back or call our office for updated information as Healthcare Reform is constantly evolving, and Tom works very hard to stay up to date on every little detail.
LATEST NEWS ON HEALTHCARE REFORM!
Continuing to Implement the ACA in a Careful, Thoughtful Manner
By: Mark J. Mazur
Over the past several months, the Administration has been engaging in a dialogue with businesses – many of which already provide health coverage for their workers – about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.
The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition. Just like the Administration’s effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.
Here is some additional detail. The ACA includes information reporting (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. We expect to publish proposed rules implementing these provisions this summer, after a dialogue with stakeholders – including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum employer shared responsibility requirements – in an effort to minimize the reporting, consistent with effective implementation of the law.
Once these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.
We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.
During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage. Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).
Mark J. Mazur is the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.
Consumer-Directed Benefits Put the Affordable in Affordable Care, By Thomas Beal
As the Patient Protection and Affordable Care Act continues to roll out, more employers
are choosing consumer-directed benefits plans. Still, many employers and employees are
struggling with the question of which plan offers the best value for their company or their
family – a consumer-directed benefits plan or a traditional health care plan.
There are no across-the-board rules for making one of the most important decisions a
business and its employees must make. People need to look carefully at their own use of health
care before choosing one plan over another.
Consumer-Directed Plans Benefit Employer and Employee
Consumer-directed benefits help companies deal with the increasing price of health care by controlling
costs. Additionally, in response to the Affordable Care Act, companies are easing the transition to this
new model bysubsidizing the premiums and contributing to health savings accounts or health reimbursement
accounts, the popular companion plans that often accompany the Consumer Directed Benefit Plans.
Employees should contact the company’s broker for a conversation regarding their
current and future healthcare needs. They should ask the important questions and rely on the
broker for advice and direction.
The pros and cons of each plan offered should be discussed and evaluated carefully based on
the specific needs of the individual and his or her family. For example, if someone has an ongoing
high-maintenance need (such as asthma or diabetes), he or she could be better off with a normal
co-pay plan. High Deductible Health Plans or HSAs or HRAs may not be a sound choice because
the employer is not going to put enough money into it.
This is a very individual decision. Of course, any conversations with an employer’s
healthcare broker remains confidential.
Consumer-Directed Benefits Plans can mean savings in multiple areas for the company
and the workers. Here are three examples.
1. Insurance savings
According to the Towers Watson survey, (conducted by the leading global professional
risk services actuarial company) companies with fifty percent or more of its workers using HSAs
and other consumer-directed benefits report total claim costs per employee of more than $1,000 lower
than companies without these types of health plans.
2. Tax savings
This one is a no-brainer. HSAs, HRAs and other tax-advantaged accounts are just that:
tax-advantaged. Employees keep more of their money; employers keep more of their money. It’s
3. Health savings
Healthier workers mean less health dollars spent by the company and the savings here
are two- fold. Many companies are using positive employee actions and incentives to help get
their workforce healthier. For the employee, that could mean additional incentive dollars into an
HSA or for other incentives, such as exercise equipment or gift cards. But the real health savings
is … health.
IRS Limits, Minimums and Maximums
The Internal Revenue Service has announced the 2014 contribution limits, deductible
minimums and out-of-pocket maximums for health savings accounts (HSAs) and high-deductible
health plans (HDHPs).
- An HDHP must have a deductible of at least $1,250 for individual coverage and at least
$2,500 for family coverage (including a minimum $2,500 embedded individual deductible
under family coverage) to qualify an individual to contribute to an HSA. These minimum
deductibles are unchanged from 2013.
- Out-of-pocket maximums for an HSA-qualifying HDHP in 2014 are $6,350 for individual
coverage and $12,700 for family coverage. These are increased from $6,250 for individual
coverage and $12,500 for family coverage in 2013.
- Contribution limits for HSAs will be $3,300 for individual coverage and $6,550 for
family coverage in 2014. These are increased from 2013’s limits of $3,250 for individual
coverage and $6,450 for family coverage. The annual “catch-up” contribution amount for
individuals age 55 or older will remain $1,000.
The benchmark Towers Watson is using for which companies are outperforming others is
the affordability for employers and employees. The report shows that those companies working
toward increased use of Consumer Directed Benefit Plans are set up for long-term success and
are the best performers. These companies are learning how to make the Patient Protection and
Affordable Care Act not only affordable for their employees but also for themselves.